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I have just read another comment that if we leave without a deal we’ll quickly get to an agreement with the EU, as the UK is a net payer and has a trade deficit. So: A thread on the myth that “The UK-EU Free Trade Agreement will be the easiest in history” bbc.com/news/av/uk-406…
The myth has been discussed again and again: we hold all the cards, we have the better cards, this will be easy. Why will it be easy?
Myth 1) It’ll be easy because we already ARE aligned in terms of regulation. So far we have been a Member State.
The problem with that myth? FTAs are not about what you are in terms of regulations, but what you are willing to commit to. We are aligned. Are we willing to remain so?
We are not even properly debating the issue. In fact, the myth has helped to prevent any discussion. We want the highest standards ever. And an FTA with the US. We want to protect fish more than ever. And a fishing industry that fishes more than ever.
Myth 2: it’ll be easy because we have a trade deficit with the EU.
It’s true, we do have that deficit. However trade deficits have little to do with the power structure. Why? Well: Imagine the UK produces cars. 50% of the input comes from the EU. It sells all the cars to the US. The UK has a trade deficit with the EU. But...
... but all its exports also depend on the EU. Not a strong negotiation position. Or imagine the imports of life-saving medicines. Trade deficit? Yes. But good position to threaten making trade more difficult?
In trade more often than not it is the larger market that is in the stronger negotiation position.
This is not to say that the UK does not have any leverage - there’s the settling of counts (the UK was a net payer), but even more importantly the UK is a very significant economic player - one of the largest in the world.
However, that alone does not make it easy to negotiate an EU-UK FTA. So far negotiations have been difficult. We are now close to a no-deal scenario. They are STILL extremely difficult. Why exactly would they suddenly be easy after Brexit day in a no-deal scenario?
An approaching deadline means existing pressures intensify. No doubt there’s huge pressure on both sides. But for the balance of power to change it would require new, different factors.
